The fallout from midterm elections is hitting the AI-grid trade

Bloom Energy has pegged its future to on-site power generation, and data centers are among its top customers.

Bloom Energy shares got swept up in the technology sector's sharp selloff Thursday, as investors fretted that the data-center buildout was at risk of stalling in the aftermath of the U.S. midterm elections.

Bloom's stock (BE) was the second-worst performer in the S&P 500 index SPX, down more than 17%. The stock was on track to end at its lowest level in four months as it headed for its worst one-day percentage decline since late June.

The prospect of a data-center slowdown looks particularly tricky for Bloom, which has staked its future in providing on-site power generation through fuel cells and other means. Data centers are among its top customers, and optimism about the artificial-intelligence buildout had fueled Bloom's year-to-date gains of more than 90%.

"Shares are selling off on growing concerns that data-center development and associated power-generation demand could be stalled as new state leadership pursues campaign promises to push back on data-center development," said Christopher Dendrinos with RBC Capital.

Bloom is most heavily exposed to data-center end markets and could be more heavily impacted, Dendrinos said. Investors likely are most concerned with the changing politics in Texas, which is a top U.S. data-center host, he added.

The company is only just shipping its first fuel cells to Texas, where it has been underexposed as developers in the state favor natural-gas combustion technology, Dendrinos said. In addition, in New Mexico, there is growing concern that one of Bloom's largest developments could see additional delays, he said.

Texas and New Mexico elected Democratic governors on Tuesday, part of the party's widespread victories in the midterm elections that also included Democrats' sweep of Congress.

That in turn brought to the surface fears of "greater scrutiny of AI data-center development," although Bloom Energy's demand pipeline in the next couple of years may be "relatively" protected by strong demand for projects already advancing or under construction, analysts at Bloomberg Intelligence said in a recent note.

The analysts, led by Alessio Mastrandrea and Rob Barnett, believe that Bloom Energy can capitalize on the AI-fueled power constraints. Bloom's fuel cells give hyperscalers and data-center developers a faster on-site option amid grid delays and backlogs in the production of natural-gas turbines, they said.

Potentially greater gas-turbine availability remains the bigger longer-term risk to Bloom's advantages, they said.

Bloom reported better-than-expected third-quarter earnings last month, although investors eyed its spending and negative cash flow. Bloom also raised its 2026 outlook.

The latest 2026 forecast now implies a 122% sales growth, versus the projection for about 60% growth given in February, the Bloomberg Intelligence analysts said.

-Claudia Assis